Small victory in the housing bill for SME builders on Section 106 obligations

As we know the housing bill has been back and forth through parliament like a yoyo with many of the changes being rejected.

However there is some good news for small builders with regard to section 106. The government has now approved the amendment to the affordable homes contributions for small developments of 10 homes or less.

How will these changes affect you?

Why was the policy developed?

Affordable homes contributions came into force in November 2014 to help boost house building and encourage building on brownfield sites. However this caused major pressure for smaller developers, custom and self-builders to fulfil these requirements.

So the government introduced a threshold for developments of 10 units or less (and which have a maximum combined gross floor space of no more than 1,000 square metres) where the Section 106 affordable housing contributions would not be required, to help alleviate these pressures.

What does this mean for small and self-builders?

It means you can start work on sites without facing crippling costs.

If you are building homes of 10 units or less, you will no longer be required to pay Section 106 charges saving an average of £15,000 per unit and a total saving of up to 6-figures for some developers, according to government officials.

The removal of red tape and lowering of construction costs means as a small house builder you can start work on sites that otherwise prevented you from building in the first place.

What are the long term benefits to the industry?

Increase in housing supply and unlocking of small scale sustainable developments

Greater development on smaller brownfield sites

Renewed growth in output from SME house builders

Diversification of the house building sector

Increase awareness and development of custom and self-build homes

Small house builders will play an important role in helping to solve the housing crisis and this policy change will help reduce the costs that would otherwise have prevented these developments being built.